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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Massive cryptocurrency mining operation planned at former Ponderay Newsprint mill

The new owners of the shuttered Ponderay Newsprint in Usk, Washington, have formally requested enough power to restart the mill and build what could be one of the largest cryptocurrency mining operations in the country.

Allrise Capital Inc., based in Irvine, California, won an auction in April to purchase the mill for $18.1 million. The mill was one of the largest employers in Pend Oreille County when it closed last year after its previous owners filed for bankruptcy.

Todd Behrend, who remained with a skeleton crew to maintain the plant until it sold, has been hired as the CEO of Ponderay Industries LLC. Behrend confirmed the new owners hope to refit the mill to make cardboard packaging as well as add stacks of computers needed for cryptocurrency mining.

“Right now, we are waiting for the (Bonneville Power Administration, or BPA) to decide whether and how much power we can have delivered here,” Behrend said. “That will drive all the decisions.”

Colin Willenbrock, general manager of Public Utility District No. 1 of Pend Oreille County, said the mill has asked to restore the 85 average megawatts a month of electricity to restart the mill and another 220 average megawatts a month for Blockchain LLC, which is the proposed data center to mine for cryptocurrency.

For scale, Willenbrock said his small PUD averages 35 megawatts a month to provide electricity to about 9,000 commercial and residential customers. The Ponderay request would mean the mill site could receive about 10 times the electricity as all of the PUD’s other customers combined.

“This is a pretty big load in the middle of a rural service territory,” Willenbrock said. “There is a reason we need to study it and make sure our partners are comfortable.”

Even if the request was simply to restart the mill, that proposal would require a review by several agencies, he said.

“The customers have an aggressive timeline to get it ramped up. Like most customers, they need it yesterday,” Willenbrock said. “But with any significant load increase of this magnitude … we can’t just flip the switch and turn it back on.”

He said the mill has been shut down for more than a year and all the pre-existing infrastructure needs to be checked. New equipment would then need to be installed to handle the power for the cryptocurrency mining, he said.

Behrend initially had hoped to get started by Oct. 1, but that timeline has been pushed back to November or early next year, depending on approval.

“I understand Todd’s frustration,” Willenbrock said. “The public doesn’t tend to understand how the greater grid works, and how new loads come on and off, and how all that needs to be analyzed so we can maintain adequate service.”

Replacing jobs

The mill previously was jointly owned by Lake Superior Forest Products, a subsidiary of Quebec-based Resolute Forest Products, and five major U.S. publishers.

The 927-acre property consists of 29 buildings and storage facilities that were built adjacent to the Pend Oreille Valley Railroad and Pend Oreille River.

When it closed, the mill laid off 150 workers.

Behrend said he hopes the mill will rehire most of those workers. He said the data mining center could also eventually hire about that many as well, doubling the number of workers the plant employed when it closed.

“A lot of things have to fall into place,” Behrend said. “But it would be a very substantial operation and certainly a premier employer in the county again.”

Grant Forsyth, chief economist for Avista Corp., said the stated plans for reopening the mill and creating a cryptocurrency mining operation would be a huge lift for Usk.

“To lose that many jobs at once for a county that size, that was kind of a big deal,” Forsyth said.

He said many questions remain about who the plant would hire back and for what pay.

“As they kind of shift where people are working, in terms of what they are doing, is the average pay higher, the same or lower?” he said. “That’s something hard to see at the beginning.”

Forsyth also said it will be interesting to see whether the owners hire local community members to work at the data mining operation or bring them in from elsewhere.

Power supply

Behrend indicated the company was having supply-chain problems securing the computers needed to operate a major cryptocurrency mining operation.

However, he confirmed plans call for creation of one of the largest data centers in the country.

“We are in the process of trying to build out a very small one and exploring the feasibility of a much larger operation,” he said.

The largest cryptocurrency mining operation is Whinstone Inc. in Rockdale, Texas, according to the Washington Post. The Whinstone site currently uses about 300 average megawatts a month and has plans to expand to 750 megawatts by next year.

As for the planned data center in Usk, the Pend Oreille PUD does not have the capacity to supply the new power request, Willenbrock said.

The PUD gets about 90 average megawatts from the Box Canyon Dam. It gets another 48 average megawatts from Seattle City Light-Boundary Dam, and it is allocated 25 megawatts from the BPA, he said.

“Absolutely we could handle that,” Willenbrock said of the Ponderay power request. “But, we wouldn’t be able to source all that power internally.

“Whatever the net difference is would need to be purchased from a third-party marketer,” he continued. “That would come from any number of sources from the region.”